Rio Tinto profit flat as copper gains fail to fully offset weaker iron ore
Earnings and market reaction
Rio Tinto posted $10.87 billion in underlying earnings for the year ended December 31, leaving the number essentially level with the prior year and missing Visible Alpha’s $11.03 billion consensus. The stock slid in London, falling about 3.4% during morning trade as investors digested the shortfall.
Management raised the final cash distribution to 254 US cents per share, implying a payout ratio near 60% of underlying earnings, up from last year’s 225 US cents payment. That move keeps returns to shareholders prominent in capital allocation choices.
Commodity mix is shifting
The group’s profit mix shows a noticeable tilt away from its iron ore backbone: iron ore now contributes roughly 60% of earnings versus about 70% previously, while copper’s share doubled to around 30%. Higher copper prices and ramped production were the chief drivers of that change.
Rio’s copper division recorded average realised prices up about 17% year-on-year and production grew roughly 11%, helped by ramp-up at the Oyu Tolgoi operation.
Cost pressures and unit-cost outlook
Pilbara iron ore unit costs rose by approximately $0.50 per metric ton compared with 2024, a hit attributed to inflation and weather effects. Management expects Pilbara unit costs in the range of $23.50 to $25.00 per ton in the coming year, signaling further margin pressure for iron ore.
Capital moves and strategic priorities
Rio is exploring monetisation options across infrastructure and is marketing its titanium and borates business, a sign it is hunting non-core cash to redeploy or return to investors. Executives said proceeds would support balance-sheet resilience and maintain dividend policy targets within a 40–60% payout range.
The company’s earlier merger discussions with Glencore ended after valuation and ownership disagreements, leaving asset sales and selective disposals as the immediate levers to free capital.
Sector context and implications
Across the industry, copper is increasingly central to strategy as electrification and large-scale computing infrastructure lift demand; peers are using asset sales and streaming deals to unlock liquidity for shareholder returns and growth. Rio’s result underscores that transition: stronger copper performance cushioned weaker iron ore but did not produce an overall beat.
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